Total remittance receipts for the month of March 2017 rose by $3.8 million (20.6%) to $22.42 million. All categories of remittances rose with private transfers rising the most by $3.7 million (21.0%) to $21.16 million, attributed mainly to receipts of funds for family support from friends and family abroad. In year ended terms, total remittance receipts were 15.9% higher than the previous year, reaching an annual high record of $276.8 million.

45.3% of total overseas exchange transaction (OET) receipts for the month were remittances, compared to the 41.6% of the previous month. This indicates the rising contribution of remittances to the overall overseas exchange transaction (OET) receipts and the continued strong links of families abroad to their families at home.

Remittances received over the month in all major trading currencies increased. Remittances received in Australian dollar (AUD) increased by $1.5 million (27.0%), New Zealand dollar (NZD) receipts rose by $1.1 million (24.1%) and the US dollar (USD) receipts grew by $1.0 million (14.1%). This was supported by the depreciation of the Tongan Pa’anga (TOP) against the AUD and USD. Remittances received in USD remained the dominant currency for remittance receipts, which accounted for 37.6% ($8.4 million) of total remittance receipts over the month. This was followed by the AUD remittances with 31.4% ($7.0 million) and the NZD remittances with 24.8% ($5.6 million).

Foreign Exchange Dealers (FEDs) are still the preferred channel for receiving remittances. In March 2017, 87.7% ($19.7 million) of the total remittance receipts were received via FEDs during the month, compared with 85.4% ($15.9 million) in the previous month and 88.8% ($17.2 million) of March 2016.

Private Transfers

Private transfers, which are mostly receipts for family support, hold the largest component of total receipts, representing 92.0% ($21.2 million) of the total remittance receipts and 42.8% of the total OET receipts. Family support receipts via FEDs in AUD rose by $1.3 million and in addition the USD and NZD receipts both increased by $1.0 million each.

Employee Compensation1

Compensation of employees slightly rose by $0.06 million (6.7%) over the month, representing 4.4% of the total remittances. Both receipts from the other wages & salaries and Recognised Seasonal Employer (RSE) Scheme workers rose over the month by $0.05 million and $0.01 million respectively. However, in year ended terms, total employee compensation declined by $0.5 million (2.6%) to $17.6 million. Bulk of the employee compensation receipts over the year was for other wages and salaries at $10.4 million (78.5%) and the remaining 21.5% were from RSE workers.

Private capital transfer & Social Benefits

Other private transfers for capital expenditures slightly rose by $0.06 million (45.8%) to $0.2 million in March. During the month, there were higher receipts by households for house construction and renovation related activities compared to the previous month. Social benefits also slightly rose by $0.02 million (45.5%) over the month. Private capital transfers and social benefits accounted for only 0.9% and 0.3% of the total remittance receipts.

Outlook

Remittance receipts are expected to rise in the near term due to the starting of the peak season of April to July. The Reserve Bank will continue to closely monitor the remittance receipts given it is the largest source of foreign exchange inflow for the economy.

1 - Employee compensation is the sum of wages and salaries from the Recognised Seasonal Employer (RSE) program, Tongan residents working short term overseas, and resident employees serving foreign organizations.